Inflammatory monocytes can be manipulated by environmental cues to perform multiple functions. To define the role of monocytes at primary or secondary sites of infection with an intra-phagosomal pathogen we employed Leishmania major-red fluorescent protein (RFP) parasites and multi-color flow cytometry to define and enumerate infected and uninfected inflammatory cells in the skin. During primary infection, infected monocytes had altered maturation and were the initial mononuclear host cell for parasite replication. At secondary sites, this same population rapidly produced inducible nitric oxide synthase (iNOS) in an IFN- dependent manner and was critical for parasite killing. Maturation to a dendritic cell-like phenotype was not required for monocyte iNOS-production, and enhanced monocyte recruitment correlated with IFN- dependent cxcl10 expression. In contrast, neutrophils were a safe haven for parasite in both primary and secondary sites. Thus, inflammatory monocytes play divergent roles during intra-phagosomal infection at primary versus secondary sites of infection. The origin and function of dermal macrophages in cutaneous infections remain poorly studied. We found that a strain of Leishmania major (LmSd) that produces non-healing cutaneous lesions in conventionally resistant C57BL/6 mice was more efficiently taken up by M2-polarized bone marrow derived macrophages (BMDMs) in vitro and by mannose receptor (MR)hi dermal macrophages in vivo compared with a healing strain (LmFn). Both in steady and inflammatory states, the MRhi dermal macrophages showed M2 characteristics. Notably, the favored infection of M2 BMDMs by LmSd depends on MR. Both genetic deletion of MR and selective depletion of MRhi dermal macrophages by anti-CSF-1 receptor antibody reversed the non-healing phenotype. The MRhi dermal macrophages were radio-resistant and not replaced by adult bone marrow-derived cells during infection, but were locally maintained by IL-4 and IL-10. We conclude that embryonic-derived, M2-like dermal macrophages are permissive for parasite growth even in a strong TH1 immune environment, and the preferential infection of these cells plays a crucial role in the severity of cutaneous disease.